Amazon Sellers Question Misguided FTC Assertions

It’s not really news (though it was apparently leaked) that the Federal Trade Commission (FTC), after several years of investigation, may be close to filing a lawsuit alleging that Amazon’s business practices violate antitrust law.  What is news is the abject shakiness of the FTC’s reportedly strongest claim – that Amazon manipulates consumer search results to harm marketplace sellers that do not use Fulfillment by Amazon (FBA) logistics, warehousing, and delivery services. 

In Amazon-speak, the FTC’s allegation is that independent sellers on Amazon’s Marketplace which choose Fulfillment-by-Merchant (FBM) instead of Fulfillment-by-Amazon (FBA) are punished, presumably because they are not paying FBA fees. The punishment is that FBM sellers products are not presented to consumers in the “Buy Box,” which is the top listing in search results when consumers are shopping. Studies document that products presented in the Buy Box and generally in top search results listings win a disproportionate share of consumers’ business – on Amazon and other marketplaces. Thus, every seller wants to win the Buy Box – and many sellers are selling the same or similar products so they are competing against each other and often competing against Amazon’s retail division.

The problem for the FTC is that this allegation simply isn’t true – according to independent sellers and people who work closely with them.

Evans Richards owns reVend, an online-only seller of collectibles and toys from Lego, Funko, and other specialty brands. Based in Reidsville, NC, Evans employs more than 70 people in a million-square-foot warehouse and sells on Amazon, Walmart, eBay, and reVend’s own D2C website. 

reVend hasn’t used FBA since 2016,  nor do they advertise on Amazon, but reVend’s listings still win the Buy Box. “Amazon’s algorithms are secret, but it’s well known among sellers that everything at Amazon is based on only one metric – what will best serve the consumer. We win the Buy Box consistently because our products are priced fairly, get terrific reviews, are delivered on time, and our customers are happy with their shopping experience.” 

When asked about whether Amazon favors FBA Sellers or its own retail listings, Evans responded emphatically. “In my experience, I don’t believe that Amazon discriminates on FBA vs FBM. Our performance metrics are consistently above what Amazon requires, and our customers are satisfied with our delivery times. We frequently win the Buy Box on our FBM listings when we are competing against Amazon retail offerings – even when our product is priced higher. It all boils down to who can best serve the consumer on that listing, at that time. FBA is not a tool we choose to utilize anymore, but our sales and our listings are thriving on the Amazon marketplace. Our experience (across 81,000 different SKUs) does not align with the FTC’s allegations.”

Will Haire founded and leads Bellavix, a consultancy that supports dozens of brands that sell millions of dollars of products on Amazon, Walmart.com, and Target.com. Like Richards, Haire is befuddled by the idea that Amazon search results favor FBA products and discriminate against FBM products.

“Every one of our sellers makes the right decision for its business and for every product it sells,” said Haire. “Some products are fulfilled by Amazon; others are fulfilled by the seller. And over ten years helping dozens of sellers sell more than a billion dollars of product, we’ve never once thought that a fulfillment choice would impact a seller’s ability to win the Buy Box.”

Both Richards and Haire speak candidly about the risks of self-fulfillment, because a few late deliveries will definitely deprecate a seller’s listings and could result in Amazon cutting off a seller. But, says Richards, “selling on Amazon and other marketplaces has taught us well how to hit customer happiness metrics, and we’ve embraced speed and accuracy while building them as cornerstones into our fulfillment operations at our million-square-foot D2C fulfillment warehouse. That’s why we win the Buy Box, and that’s what allows us to take full advantage of the fantastic marketplace Amazon has built for third party sellers such as ourselves.”